On February 28, 1989, General Babangida kicked off the debt conversion programme with Nigerian Promissory notes being discounted at 36%.
On getting to power on August 28, 1985, General Ibrahim Babangida told the nation that “the last twenty months have not witnessed any significant changes in the national economy. Contrary to expectations, we have so far been subjected to a steady deterioration in the general standard of living; and intolerable suffering by the ordinary Nigerians have risen higher, scarcity of commodities has increased, hospitals still remain mere consulting clinics, while educational institutions are on the brink of decay.
Unemployment has stretched to critical dimensions. Due to the stalemate, which arose in negotiation with the International Monetary Fund, the former government embarked on a series of countertrade agreements, Nigerians were forced to buy goods and commodities at higher prices than obtained in the international market. The government intends to review the whole issue of counter-trade. A lot has been said and heard about our position with the International Monetary Fund. Although we formally applied to the Fund in April 1983, no progress has as yet been made in the negotiation and a stalemate has existed for the last two years. We shall break the deadlock”. We were all very happy about the assurances.
While swearing in the new governors on September 2, 1985, General Babangida hinted that the IMF loan issue would be thrown open for debate. He then appointed Dr. Kalu Idika Kalu (79), from Ebem, Ohafia in Imo state, who was an Economist from the World Bank as Minister of Finance. Dr Kalu had earlier served as Commissioner of Finance under the then governor of Imo state, Brigadier General (rtd) Ike Omar Sanda Nwachukwu (78). At the time General Babangida took over, 44% of our revenue was utilized in servicing debts. On September 25, 1985, President Babangida inaugurated the Presidential committee on IMF loan with Professor Ojetunji Aboyade (December 9,1931 – December 31, 1989) as Chairman. He hailed from Awe in Oyo state. He served as Vice Chancellor, University of Ife (now Obafemi Awolowo University) between 1975-1978. The committee had inputs from the then Permanent Secretary, Ministry of Finance, Alhaji Abubakar Alhaji (80) from Sokoto, Dr. Chu S.P. Okongwu (84), from Enugu, who was then appointed Minister for National Planning and Chief Samuel Oluyemi Falae (80) from Akure, who was the Secretary to the Government of the Federation. The Committee submitted its report on December 3 1985. As far back as 1971, Alhaji Abubakar Alhaji was the executive director of Africa Development Bank and since 1990 he has been the Sardauna of Sokoto. At present, his daughter Aisha Abubakar is the Minister for Women Affairs. Chief Falae is a product of Yale University, where he majored in Economics. Dr, Okongwu is a product of Harvard University, Massachusetts. He once worked in the World Bank. He wrote a book titled “THE ELEEMOSY- NARY OF TRAUMATIC NIGERIA ECONOMY”. With his failing health and poor financial purse like most Nigerians, the last time we heard from Dr. Okongwu was when he paid tribute to the former Group Executive Director, Commercial and Investment of the NNPC, Reverend Benson Ilesanmi Omamukuyo on his 70th birthday on August 11 this year.
On December 12, 1985, General Babangida made a broadcast to the nation, he said “After due consideration of all the opinions expressed by Nigerians and other residents as embodied in the Interim Report on the IMF loan, government has come to the conclusion that for now the part of honour and the essence of democratic patriotism lies in discontinuing the negotiations with IMF for a support loan. This is clearly the will of majority of our people on the issue. We have therefore decided to face the challenge of restructuring our economy not through an IMF loan, but a determination of our people to make all the sacrifices necessary to put the economy on the path of sustained growth; doing so at own pace and on our own volition”.
On July 6, 1986, General Babangida introduced Structural Adjustment Programme (SAP). A regime that rejected the IMF loan adopted the Structural Adjustment Programme. Till today I can’t understand. For SAP consist of loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experienced economic crises. The programme is supposed to allow the economies of the developing countries to become more market oriented. This then forces them to concentrate more on trade and production so it can boost their economy. Through conditions, they generally implement “free market” programmes and policy. SAP include internal changes (notably privatisation and deregulation) as well as external ones, especially the reduction of trade barriers. Countries that fail to enact these programmes may be subject to severe fiscal discipline. Critics argue that the financial threats to poor countries amount to blackmail, and that poor nations have no choice but to comply.
On September 29, 1986, General Babangida introduced the second-tier foreign exchange market. And suddenly we woke up to realize that our currency, the naira, had been devalued by about 500%. We are yet to recover from the effect of SAP.
Because in retrospect, SAP was like a poison. It created social problems throughout the country and the devaluation kept going on and on. On July 2, 1987, General Babangida was forced to merge the first and second tier exchange market.
On February 28, 1989, General Babangida kicked off the debt conversion programme with Nigerian Promissory notes being discounted at 36%. He later abolished the autonomous market and dropped the Dutch auction system of bidding. He had earlier on January 9 1989 merged the foreign exchange and autonomous market. By that time the dollar was scarce to come by.
On July 27, 1992, General Babangida addressed members of the National Assembly elect in Abuja.
He said “At the root of all those related economic and financial problems is government’s inability to cater both for its minimum social agenda at home as well as service (not to say, settle part of the principal) the nation’s external indebtedness. The stock of our external debt is now about $34 billion; and the debt service load for 1992 alone is about $3.5 billion. In financing that debt service load, there remain the problems of the availability of foreign exchange and then those of the budgetary provision for the naira in relation to available resources. Government’s policy of placing an upper limit of 30 percent of the official foreign exchange receipts for external debt service only buys time and further postpones the compounded hardships. It is therefore not surprising that the problem of debt service has given rise directly and indirectly to persistent budget deficit, despite government’s determined effort to work towards a balanced budget”. After 8years in power, General Babangida handed over to Chief Ernest Adegunle Oladeinde Shonekan (82) on August 26, 1993. He met the naira two naira to $1 American dollar and left it for N19 to $1Dollar at the official rate. It was worse than that in the black market. Thanks to SAP and those who introduced it to General Babangida. The major voice against SAP at that time was General Olusegun Obasanjo (rtd.), who attacked the programme as “lacking human face”, and he was quickly rebuked by the then Military Governor of Lagos state, Captain Mike Okhai Akhigbe (1946-2013) from Fugar in Etsako central local government of Edo state.
There are those who argued even till today that the SAP was the only remedy for us at that time, but to me, the SAP was more destructive than the June 12, 1993 annulment. It was a venom. An economic toxin. One day I expect General Babangida to explain to us fully why he adopted SAP. Greece is the latest victim of SAP dose. The same with Jamaica. The argument is simple. If SAP is the best remedy why did the G8 countries not adopt it. It reminds me of a 361 page book titled “HOW EUROPE UNDERDEVELOPED AFRICA” written by Walter Rodney with introduction by Vincent Harding. It is a must read book.